Top U.S. insurer sees weak Obamacare sign-ups, prepares for delay

Specialists help callers and potential customers find health insurance at a customer contact and call center for HealthSource RI, Rhode Island's health insurance exchange program for the Affordable Care Act or ''ObamaCare,'' in Providence, Rhode Island October 25, 2013.

Reuters/Brian Snyder

A top U.S. health insurer gave the first detailed view of how the problem-plagued rollout of President Barack Obama's signature healthcare law is affecting the industry, saying on Wednesday it had cut its enrollment forecasts by at least a half and expected the government to delay the sign-up deadline.

Humana Inc said that because of technical problems preventing millions of Americans from accessing the federal HealthCare.gov website since it opened on October 1, the company had slashed its expectations of signing on 500,000 new plan members to an estimate of closer to 250,000.

The open enrollment period ends on March 31, and Republican and Democratic lawmakers are asking the Obama administration to give people more time to sign up for plans offered in online marketplaces. U.S. Health and Human Services Secretary Kathleen Sebelius rejected the idea at a Senate hearing on Wednesday.

"We are still at the beginning of a six-month open enrollment that ends at the end of March, and there's plenty of time to sign up for the new plans," she said.

UnitedHealth Group, the largest healthcare insurer in the United States, said on Wednesday it would work with the federal government "if a decision is made to allow individuals more time to sign up."

The insurance industry has lobbied against an extension that would include delaying the law's penalty for Americans who do not obtain coverage by the end of March, saying it would leave them with a heavier concentration of sicker, costlier patients. That would create even greater business losses and higher prices for consumers down the road, and could require the federal government to come in and cover some of the damage.

But Humana said on Wednesday it was assuming a delay at this point, and that it already cut its view for profits from the new business that it had expected from healthcare reform.

"We're waiting for guidance from the government around whether they are going to change mandates and whether they are going to do things to extend the enrollment period," Humana Chief Operating Officer Jim Murray said during a call with investors to discuss quarterly results.

"Given where we're at today, our assumption is that there will be an extension to the open enrollment period," he said.

The 2010 Affordable Care Act, also known as Obamacare, mandates that everyone have health insurance coverage or pay a fine. It also set up online exchanges, or marketplaces, for millions of uninsured Americans to enroll.

Sebelius said that the agency was updating enrollment targets, one of which called for about a million people to sign up through December. "I can tell you, our early enrollment numbers are going to be very low."

The Obama administration has not made enrollment data public since the new insurance marketplaces opened, but is expected to provide figures next week. As many as 7 million Americans were expected to sign up for coverage, according to the Congressional Budget Office.

The problems at HealthCare.gov, which serves consumers in 36 states, have cast doubt on whether enrollment will come close to that forecast, or include some 2.7 million young and healthy Americans that the government says are needed to offset the cost of sicker beneficiaries and keep Obamacare financially viable.

The administration says it is working around the clock to have HealthCare.gov working smoothly by November 30 so that people can sign up in time for coverage on January 1. Humana is offering plans through the site in 12 states, including Florida and Texas, home to a large concentration of the uninsured. It also sells coverage on state-run exchanges in Kentucky and Colorado.

CREATING NEW PROBLEMS

While Republicans have opposed the healthcare law all along as an unwarranted expansion of the federal government and criticized the website rollout, some Democrats are also calling for a delays in aspects of the law. They include Senator Joe Manchin, a Democrat from West Virginia who wants a delay in the sign-up penalty in 2014 and Senator Jeanne Shaheen of New Hampshire persuaded nine fellow Democrats to join her in urging the administration to extend the enrollment period.

"We think that the administration has the authority to act (to extend the deadline) without additional legislation, but that's always an option," Shaheen told a Reuters reporter in a Capitol Hill hallway earlier in the week.

Robert Zirkelbach, spokesman for industry's main lobby group AHIP, said this week that a delay of one year "could have a destabilizing effect on insurance markets, resulting in higher premiums and coverage disruptions."

This would mean a smaller and sicker insurance pool for the health plans being offered, increasing the costs to insurers and resulting in them raising rates for 2015 or dropping out. It could also put the federal government on the hook for covering some insurer losses under the law.

Paul Ginsburg, president of the Center for Studying Health System Change in Washington, said that the administration's insistence against a delay "means that they appreciate the damage that such a delay would do, and don't want to do it unless it's necessary."

Douglas Holtz-Eakin, president of the American Action Forum and former advisor to Republican Senator John McCain, said increasing delays could also work against the goal of signing up more people.

"It sends the signal that this isn't working," he said. "That's not an appealing reason to go sign up."